New England states take fresh look at carbon feeRod Kuckro, E&E News reporter

New England states have considered imposing economywide carbon fees before, but this year's efforts have taken on a sense of urgency with an administration in Washington that is rolling back policies to control power-sector greenhouse gas emissions.

The states already attack greenhouse gases as members of the Regional Greenhouse Gas Initiative (RGGI), a cap-and-trade program for buying and selling pollution credits aimed at ratcheting down emissions across New England and in New York, Delaware and Maryland.

Massachusetts and Connecticut consume 80 percent of the electricity in New England and are taking a leadership role in expanding the push for further cuts.

"The terrible situation in D.C. is intensifying grass-roots activity around here," said Massachusetts state Sen. Michael Barrett (D), the chief sponsor of a bill that would establish a revenue-neutral fee program on fossil fuels used for heating, cooling and transportation.

Under the plan, the initial $10-per-ton charge on carbon dioxide emissions would be returned to citizens and businesses as rebates.

With more than 60 co-sponsors, Barrett said there is "a great deal of momentum" for a carbon fee. Barrett is chairman of the Joint Committee on Telecommunications, Utilities and Energy.

He said members of the Massachusetts Senate leave Boston weekly and hold forums for residents in cities and towns. "So far, carbon pricing has been really popping at these evening community open mikes," Barrett said. "I think people here are really freaked out about the environment, but also there's no question they feel an intensified need to act in light of what's going on in Washington."

It could take up to two years to get a measure through the Legislature and to Gov. Charlie Baker (R), Barrett said.

"Maybe two years ago, statewide carbon pricing was a complement to federal global warming policy. But now it's the main event. That is a sea change," he said.

Fits and starts

The idea of a national carbon fee has never gained much traction, although in February the Climate Leadership Council, led by former Secretary of State James Baker, touted the idea at a Washington news conference and in a meeting with White House economic adviser Gary Cohn (Greenwire, Feb. 8).

The Washington Post reported yesterday that the Trump administration is exploring a carbon fee as part of a broader tax code overhaul.

Yet in Vermont, prospects for a carbon charge have dimmed since the election last year of Gov. Phil Scott (R).

His Democratic opponent, Sue Minter, favored "a backdoor version of a carbon tax," said John McClaughry, vice president of the Ethan Allen Institute, a free-market think tank.

Scott repeatedly said "he'd veto a carbon tax, and he won, so the liberals are gun-shy about jumping on the carbon tax bandwagon this year," McClaughry said.

Instead, a state legislative committee is considering a bill that would fund a study of carbon taxes enacted in British Columbia and Ireland, as well as potentially expanding RGGI in the northeastern United States.

But even that study may not get far, McClaughry said. "We've made the carbon tax a radioactive issue."

In Rhode Island and Connecticut, bills similar to Barrett's in Massachusetts are pending. The Connecticut measure, if enacted, would not take effect unless there was reciprocal legislation passed in Massachusetts and Rhode Island to help minimize adverse regional economic effects.

In Connecticut, a hearing was held last month on a bill that is being championed by state Rep. Jonathan Steinberg (D). While he said the hearing was "a great kickoff," the bill "was not voted out of committee. So its time has not come," Steinberg said.

Steinberg said he expects it will take several years for his bill to get anywhere. "We had virtually no expectation that such a bill would pass this session in either chamber," he said.

But he said the hearing began a process to educate voters on "the need to account for the real cost of carbon-based energy sources."

Looking for the silver bullet

In Rhode Island, there are two measures pending — one that would study a multistate carbon pricing program and another that would impose a fee of $15 per ton of CO2 on any fossil-based fuel.

The latter is opposed by the New England Power Generators Association, said President Dan Dolan.

NEPGA is not opposed to a carbon fee "as a concept," Dolan added.

"Economists often hold out a carbon tax as the most efficient way" to cut greenhouse gases, he said.

And the state efforts may be "signaling a coordinated effort across the states to put in place an economywide carbon fee rather than a patchwork of approaches that we've had concerns about," Dolan said.

So a broader solution "is something that is worth everybody taking a look at on a regionwide, economywide basis. At this point, we haven't seen the silver bullet proposal out there that we think makes a lot of sense," he said.

The Acadia Center's Peter Shattuck, who directs its Clean Energy Initiative, thinks a key is that "these bills would capture transportation, which is the largest share of emissions" in the northeastern United States.

"Some of the traditional fossil generators have been saying for the last couple of years that [carbon reduction] is all happening on the back of the electric sector, so we need to look at transportation and other sectors," he said.

Shattuck thinks there could be "an interesting convergence" of interests on a carbon fee and a "recognition that a big idea likes this takes time for people to get educated."

For him, the current discussion has "clear echoes of the bipartisan leadership of the early 2000s, when we had governors and states come together to form RGGI."

"I'm always loath to handicap these sorts of things, but I do think the prospects are better than they've ever been before," he said.

http://www.eenews.net/energywire/2017/04/05/stories/1060052624

Posted on Wednesday, April 5, 2017 (Archive on Wednesday, April 26, 2017)Posted by Jym St. Pierre Contributed by Jym St. Pierre